1. What are the current tax rates in Ukraine?

As of 2021, the current tax rates in Ukraine are as follows:

– Individual income tax rate: 18%
– Corporate income tax rate: 18%
– Value Added Tax (VAT) rate: 20%
– Property tax rate: varies depending on location and type of property, with a maximum of 2.2% for commercial properties and 1.5% for residential properties
– Social security contributions: 22.5% for employers and 22% for employees
– Dividend tax rate: 9%
– Inheritance/gift tax rate: varies depending on the relationship between parties, with a maximum of 10%

Note that there are also several special regimes and exemptions applicable in certain circumstances. It is always recommended to consult with a local tax advisor or accountant for specific information related to your situation.

2. How does Ukraine determine income tax for individuals and businesses?

The income tax in Ukraine is determined separately for individuals and businesses.

For individuals, the income tax rate is a flat 18% on all forms of income, including salary, dividends, interest, and capital gains. However, there is a progressive tax rate of 9% for certain types of income up to a certain limit. This includes income from freelancing activities, copyright fees, and royalties.

For businesses, the income tax rate is a flat 18%. In addition to this, businesses with annual revenue exceeding approximately $370,000 are subject to an additional surcharge of 5% on profits above this threshold.

Businesses are also able to deduct certain expenses from their taxable income when calculating their income tax liability. These expenses must be related to the business operations and can include employee wages and benefits, rent and utility costs, advertising expenses, and depreciation of assets.

The Ukrainian government has also implemented various incentives for businesses such as preferential tax rates for certain industries or regions, tax breaks for small and medium-sized enterprises (SMEs), and exemptions for newly established companies.

Overall, the taxes paid by individuals and businesses in Ukraine are based on self-assessment and payroll withholding by employers. Tax returns must be filed annually by March 31st of the following year. Failure to comply may result in penalties or fines imposed by the Ukrainian authorities.

3. Are there any tax relief programs or deductions available for taxpayers in Ukraine?

Yes, there are several tax relief programs and deductions available for taxpayers in Ukraine:

1. Personal income tax credits: Taxpayers may be eligible for various tax credits which reduce their taxable income, including for child dependents, housing expenses, education expenses, and medical expenses.

2. Simplified taxation system: Small businesses with an annual turnover of less than 5 million UAH (approximately $180,000 USD) can opt to pay a fixed rate of 3% or 5% on their net revenue instead of regular income tax.

3. Corporate asset depreciation allowances: Businesses can claim accelerated depreciation allowances on certain assets, reducing their taxable profits.

4. Investment incentives: Certain industries and regions in Ukraine offer investment incentives such as exemptions from taxes on capital gains or property taxes.

5. Charitable donations: Taxpayers who make donations to registered charitable organizations can deduct up to 4% of their taxable income from their tax liability.

6. VAT refunds for exporters: Businesses that export goods or services may be eligible for a refund of Value-Added Tax (VAT) paid on raw materials and supplies used in the production process.

7. Regional tax exemption schemes: Some regions in Ukraine offer reduced corporate income tax rates or full exemptions to attract investment and stimulate economic growth.

It’s important to note that eligibility for these programs and deductions may vary depending on the taxpayer’s specific circumstances and compliance with all relevant laws and regulations. It is recommended to consult with a qualified tax professional in Ukraine for personalized advice on available tax relief options.

4. What are the major types of taxes collected in Ukraine, and how much revenue do they generate?

The major types of taxes collected in Ukraine are:

1. Personal income tax: This is levied on individuals’ income and includes wages, salaries, and other forms of income. The current rate is a flat rate of 18%.

2. Value-added tax (VAT): This is a consumption tax applied to most goods and services sold in Ukraine, at a standard rate of 20% or reduced rates of 7% or 0% for certain categories.

3. Corporate income tax: This is a tax on the profits earned by companies, with a flat rate of 18%.

4. Excise taxes: These are indirect taxes on specific goods such as alcohol, tobacco, fuel, and automobiles.

5. Property tax: This is a tax on real estate property owned by individuals or legal entities.

6. Import and export duties: These are taxes imposed on goods imported into or exported out of Ukraine.

7. Social security contributions: Employers and employees are required to make contributions towards social security payments related to healthcare, pension, unemployment insurance, etc.

According to data from the State Tax Service of Ukraine for 2020, the top revenue-generating taxes were VAT (38%), personal income tax (22%), corporate income tax (13%), and excise taxes (11%). Import duties accounted for 6%, while social security contributions made up 10% of total tax revenue.

5. How does sales tax and value-added tax (VAT) work in Ukraine?

Sales tax and value-added tax (VAT) are both forms of indirect taxation imposed on the sale of goods and services in Ukraine. However, there are some differences in how they work.

Sales tax is a flat rate tax that is applied to the final retail price of a product or service. The current sales tax rate in Ukraine is 20%. This means that for every product purchased, an additional 20% will be added to the total cost as sales tax.

On the other hand, VAT is a multi-stage tax that is applied at each stage of production and distribution. It is calculated based on the difference between the sale price and the cost of materials used to produce the item. The current VAT rate in Ukraine is also 20%.

The main difference between sales tax and VAT is their applicability. Sales tax only applies to the final consumer of a product, while VAT applies at every stage of production, regardless of whether it is sold or not. This means that businesses are responsible for paying VAT on their own purchases as well as collecting it from customers on their sales.

Another notable difference between these two taxes is how they are collected and remitted. Sales tax is collected by the vendor at the point of sale and then remitted to the government separately from other taxes. On the other hand, VAT is generally included in the overall price of a product or service and then remitted to the government by different stages of production or distribution through a system called “VAT credit.”

It’s also worth noting that while both sales tax and VAT exist in Ukraine, usually only one of them – typically VAT – applies to any given transaction.

In summary, sales tax and VAT work differently in Ukraine but ultimately serve as sources of revenue for the government on goods and services sold within its borders.

6. Are there any tax treaties in place between Ukraine and other countries to avoid double taxation for individuals and businesses?

Yes, Ukraine has tax treaties in place with more than 80 countries to avoid double taxation for individuals and businesses. These include treaties with countries such as the United States, Canada, China, Germany, France, and many others. These treaties typically specify the rules for how income will be taxed when earned in one country by a resident of another country. They also provide mechanisms for avoiding double taxation and resolving any disputes that may arise between the tax authorities of the two countries.

7. What is the process for filing taxes in Ukraine? Is it mandatory for all citizens/residents to file a tax return?

The process for filing taxes in Ukraine involves the following steps:

1. Determining tax status: The first step in filing taxes in Ukraine is to determine your tax status, which is based on whether you are a resident or non-resident for tax purposes.

2. Obtaining a taxpayer identification number (TIN): If you do not have a TIN, you will need to obtain one from the State Tax Service of Ukraine.

3. Gathering necessary documents: To complete your tax return, you will need to gather all necessary documents such as income statements, receipts, and other relevant paperwork.

4. Completing the tax return form: Once you have all the necessary documents, you can complete the tax return form provided by the State Tax Service of Ukraine.

5. Submitting the tax return: You can submit your completed tax return either electronically or in person at your local State Tax Service office.

6. Paying any taxes owed: After submitting your tax return, if you owe any taxes, they must be paid by the due date specified by the State Tax Service of Ukraine.

It is mandatory for all citizens and residents of Ukraine to file a tax return if they have taxable income. Non-residents may also be required to file a tax return depending on their sources of income within Ukraine. Failure to file a tax return or pay taxes owed may result in penalties and fines imposed by the State Tax Service of Ukraine.

8. How does payroll or employment taxation work in Ukraine? Are employers responsible for paying certain taxes on behalf of employees?

In Ukraine, payroll or employment taxation refers to the taxes that are deducted from an employee’s salary by the employer and paid to the state. Employers are responsible for deducting and paying certain taxes on behalf of their employees.

The main employment tax in Ukraine is the personal income tax (PIT), which is currently a flat rate of 18%. This tax is deducted directly from an employee’s salary and paid to the state by the employer.

In addition to PIT, employers are also required to pay social security contributions. These contributions consist of a pension fund contribution (22%) and a social security fund contribution (3.5%). The total social security contribution is calculated based on an employee’s gross salary and paid by the employer.

Employers are also responsible for paying certain other mandatory taxes such as a unified social contribution (34.7%), military duty (1.5%) and a vocational training fund contribution (1%). These payments are usually made quarterly or annually depending on the type of business.

Other workplace benefits such as health insurance, life insurance, retirement plans, etc., may also be subject to taxation in Ukraine.

It is important for employers to accurately calculate and deduct these taxes from their employees’ salaries and make timely payments to avoid penalties and legal issues. Failure to comply with these tax requirements can result in fines, interest charges, and potential legal action.

9. Are there any specific tax incentives offered by the government to encourage certain industries or investments in Ukraine?

Yes, the Ukrainian government offers various tax incentives to encourage specific industries and investments in the country. These include:

1. Investment tax credit: Investors who make capital investments in certain priority sectors, such as agriculture, energy, and infrastructure, may be eligible for a 30% investment tax credit.

2. Reduced corporate tax rate: Companies engaged in agricultural production or innovation and IT-related activities can benefit from a reduced corporate tax rate of 5%.

3. Tax holidays: Newly established companies in qualifying industries may be eligible for a tax holiday of up to 5 years on corporate income tax, land tax, property tax, and fixed asset depreciation.

4. Preferential VAT rates: A reduced VAT rate of 7% is available for certain agricultural products and medical goods.

5. Innovation grants: The government provides grants and subsidies to support innovation and R&D activities in areas such as biotechnology, aerospace, and nanotechnology.

6. Free economic zones (FEZ): Companies operating within designated FEZs are exempt from corporate income tax for the first 10 years of operation.

7. Regional development incentives: Businesses located in economically underdeveloped regions can benefit from reduced income taxes and social security contributions.

8. Customs duties exemptions: Certain imported equipment and machinery used for production purposes may be exempt from customs duties.

9. Simplified taxation system: Small businesses with an annual turnover below UAH 5 million can opt for a simplified taxation system with lower rates of taxation.

It is advisable to consult with a local tax advisor or government representative to determine eligibility for any potential tax incentives when considering investing or starting a business in Ukraine.

10. Is there a progressive or flat tax system in place in Ukraine? How do different income levels affect the amount of taxes paid?

Ukraine has a progressive tax system in place, where individuals with higher incomes pay a higher percentage of their income in taxes. The current income tax rate for individuals is as follows:

– 5% for monthly incomes up to 8,000 Ukrainian hryvnia (UAH)
– 10% for monthly incomes between UAH 8,001 and UAH 12,000
– 15% for monthly incomes between UAH 12,001 and UAH 20,000
– 17% for monthly incomes above UAH 20,000

This progressive system means that individuals with higher incomes pay a higher percentage of their income in taxes compared to those with lower incomes. For example, someone making UAH 40,000 per month would pay a total of UAH 6,150 in taxes (5% on the first UAH 8,000 + 10% on the next UAH 4,000 +15% on the next UAH 8,000 +17% on the remaining UAH 20,000).

On the other hand, someone making only UAH 5,000 per month would only pay a total of UAH250 in taxes (5%on their entire income). This means that those with higher incomes are subject to paying more in taxes.

In addition to income tax, there are also social security contributions that are calculated based on an individual’s salary and paid by both employees and employers. These contributions are also progressive and increase as an individual’s income increases.

Overall, the progressive tax system allows for those with higher incomes to contribute more towards government revenue while also providing some relief for those with lower incomes.

11. What is the role of the national tax authority in collecting and enforcing taxes in Ukraine?

The role of the national tax authority in collecting and enforcing taxes in Ukraine is to administer and enforce the country’s tax laws and regulations. This includes:

1. Collecting taxes: The national tax authority, known as the State Tax Service (STS), is responsible for collecting various types of taxes, including income tax, value-added tax (VAT), excise tax, property tax, etc.

2. Ensuring compliance: The STS is responsible for ensuring that taxpayers comply with their tax obligations by filing accurate returns and paying the correct amount of taxes.

3. Tax registration: The STS is responsible for registering taxpayers and providing them with a unique taxpayer identification number (TIN).

4. Auditing taxpayers: The STS has the power to conduct audits on taxpayers to verify the accuracy of their tax returns and identify any potential discrepancies or non-compliance.

5. Investigating tax fraud: In cases of suspected tax fraud or evasion, the STS has the authority to investigate and prosecute offenders.

6. Enforcing tax laws: The STS has the power to impose penalties on taxpayers who fail to comply with their tax obligations or commit other violations of tax laws.

7. Providing taxpayer education: The STS is also responsible for educating taxpayers about their rights and responsibilities regarding taxes, as well as any changes in tax laws or regulations.

Overall, the main role of the national tax authority in Ukraine is to ensure that all eligible taxpayers pay their fair share of taxes and to maintain a fair and transparent taxation system for the benefit of the country’s economy.

12. How often do tax laws change in Ukraine, and how can individuals/businesses stay updated on new regulations?

Tax laws in Ukraine can change quite frequently, as they are often influenced by political and economic factors. It is important for individuals and businesses to stay updated on these changes as they can have a significant impact on their finances.

Here are some ways to stay updated on tax laws in Ukraine:

1. Government sources: The State Fiscal Service of Ukraine (SFS) is responsible for enforcing tax laws in the country. They regularly publish updates and changes to tax laws on their official website.

2. Tax advisors: Hiring a tax advisor or accountant who is familiar with Ukrainian tax laws can help individuals and businesses stay updated on any changes that may affect them.

3. Business associations: Joining business associations or chambers of commerce can also be helpful in staying informed about tax law changes in Ukraine. These organizations often provide updates and seminars on important developments that may affect businesses.

4. Consult professional journals or publications: There are various publications and online resources that provide updates and analysis on tax laws in Ukraine, such as “Tax Management International Forum” and “Lexology”.

5. Attend seminars or conferences: attending seminars or conferences related to taxation can also provide valuable insights into new regulations and changes in the industry.

It is important to regularly check for updates from reliable sources to ensure compliance with current tax laws in Ukraine.

13. Are there any special considerations for foreign investors or expatriates living/working in Ukraine regarding taxation?

Yes, there are several special considerations for foreign investors and expatriates regarding taxation in Ukraine:

1. Residence status: For tax purposes, a person is considered a resident of Ukraine if they have been physically present in the country for 183 days or more in a calendar year. Non-residents are subject to different tax rules.

2. Tax residency certificate: Non-residents who are subject to income taxes in their home country may be eligible for a tax residency certificate from their home country. This certificate can exempt them from certain types of taxes in Ukraine.

3. Double taxation treaties: Ukraine has double taxation treaties with many countries, which aim to avoid double taxation on income earned in both countries. These treaties also provide specific rules for determining residency status and may override domestic tax laws.

4. Tax rates: Foreigners and expatriates may be subject to higher tax rates than Ukrainian residents, depending on the type of income they earn.

5. Work permits and visas: Foreigners working in Ukraine must obtain a work permit and temporary residence visa before starting work.

6. Withholding tax: Non-residents are subject to withholding tax on certain types of income, such as dividends, interest, royalties, and technical services fees.

7. Personal Income Tax (PIT): Expatriates living and working in Ukraine are subject to PIT on their worldwide income unless exempt under a double taxation treaty or tax residency certificate.

8. Social security contributions: Foreign employees working in Ukraine are subject to social security contributions at a rate of 22% on gross salary, with 11% paid by the employer and 11% paid by the employee.

9. Value Added Tax (VAT): Businesses owned by non-residents must register for VAT if their annual turnover exceeds UAH 1 million (approximately USD 37,000).

10. Transfer pricing rules: Foreign-owned companies operating in Ukraine must comply with transfer pricing regulations when conducting transactions with related parties.

11. Tax incentives: There are various tax incentives available for foreign investors, such as reduced corporate income tax rates and tax holidays in certain industries or regions.

12. Exit tax: Non-residents who sell assets in Ukraine may be subject to an exit tax based on the value of the assets at the time of sale.

13. Compliance requirements: Foreign investors and expatriates must comply with all relevant tax laws and regulations, including filing tax returns and paying taxes on time, to avoid penalties and fines. It is recommended to seek professional advice and assistance for taxation matters in Ukraine.

14. Can taxpayers appeal their tax assessments or challenge any errors made by the national tax authority?

Yes, taxpayers can appeal their tax assessments or challenge any errors made by the national tax authority. In most cases, taxpayers must first file an administrative appeal with the national tax authority before seeking judicial review. The specific process and time frame for appeals may vary depending on the country’s tax system and laws. It is important to consult with a tax professional or lawyer for guidance on how to properly lodge an appeal and the relevant deadlines.

15. Are capital gains taxed differently than regular income in Ukraine? If so, what are the rules and rates applied?

Yes, capital gains in Ukraine are taxed differently than regular income. The tax rate for capital gains is 5%, compared to the regular income tax rate of 18%. However, there are some exceptions to this rule.

According to Ukrainian tax laws, the following types of assets are taxable at a higher rate of 18%:

– Real estate held by individuals for less than three years
– Securities and derivative financial instruments held by individuals for less than one year
– Profits from the sale of corporate rights (shares) owned by individuals who are not registered as business entities

For corporate entities, capital gains on the sale of assets are subject to the regular corporate income tax rate of 18%.

It is important to note that in some cases, capital gains from the sale of assets may be exempt from taxation. This includes sales of personal residential property if it has been owned for more than three years, and certain types of business-related assets.

Taxpayers in Ukraine must declare their capital gains on their annual tax return. Failure to do so may result in penalties and fines.

16. Does inheritance or gift taxation exist in Ukraine, and if yes, what are the applicable rates?

Yes, inheritance and gift taxation exist in Ukraine. Inheritance tax is imposed on the transfer of property or assets after the death of a person, while gift tax is levied on transfers of property during a person’s lifetime. The applicable rates for inheritance and gift tax in Ukraine are determined based on the value of the transferred assets and the relationship between the donor/ deceased and the recipient.

Inheritance tax rates in Ukraine range from 5% to 18%, depending on the value of the inherited property. The following table outlines the applicable rates:

Value of inherited property (in UAH) | Tax rate
— | —
Up to 180,000 UAH | 5%
From 180,000 to 1 million UAH | 10%
From 1 million to 3 million UAH | 15%
Over 3 million UAH | 18%

Gift tax rates in Ukraine range from 10% to 18%, depending on the value of the gifted property and the relationship between the donor and recipient. The following table outlines the applicable rates:

Relationship between donor and recipient | Value of gifted property (in UAH) | Tax rate
—|—|—
Spouse, parents, children, siblings | Up to 200,000 UAH | Exempt
Spouse, parents, children, siblings | Over 200,000 UAH | 5%
Other relatives up to third degree (e.g. grandparents, grandchildren) | Up to 200,000 UAH| Exempt
Other relatives up to third degree (e.g. grandparents, grandchildren) | Over $200,000 USD (equivalent in local currency) or more than one property item as a gift within three years|9%
Other relatives up to third degree (e.g. grandparents, grandchildren) | Over $200,000 USD (equivalent in local currency)| 18%
Other cases | Any value | 18%

17. How is property taxed in Ukraine, both residential and commercial? And are there any exemptions available?

In Ukraine, property is taxed differently depending on whether it is residential or commercial.

Residential property is subject to a yearly real estate tax, which is calculated based on the area and location of the property. The rate of this tax varies from 0.1% to 1.5% of the estimated value of the property, depending on the city or town where it is located.

Commercial property, including offices, retail spaces, and industrial facilities, are subject to a real estate tax as well. The rate for commercial properties is typically higher than for residential properties and can range from 1.5% to 3% of the estimated value.

There are certain exemptions available for both residential and commercial properties in Ukraine. For residential properties, there may be exemptions for newly constructed buildings or certain types of housing (such as social housing or military housing). Additionally, owners over the age of 60 may qualify for a discounted rate on their real estate tax.

For commercial properties, there may be exemptions available based on their use. For example, businesses that create new jobs in economically depressed areas may be eligible for a tax break. Agricultural land also has lower rates compared to other types of commercial properties.

Furthermore, some regions in Ukraine offer additional incentives such as reduced tax rates for businesses investing in their local economy or creating new jobs.

It’s important to note that these exemptions and incentives vary by region and are subject to change. It’s best to consult with a local tax advisor for specific information about taxes and exemptions applicable to your property in Ukraine.

18. Are there any local or municipal taxes in addition to national taxes in Ukraine? How much do they contribute to overall tax revenue?

Yes, there are several local or municipal taxes in addition to national taxes in Ukraine. These include property tax, land tax, transport tax, and a single tax on small businesses.

According to the State Fiscal Service of Ukraine, local taxes contributed approximately 14% to overall tax revenue in 2020. This includes property tax (4%), land tax (2%), transport tax (2%), and single tax on small businesses (6%). However, the contribution of these local taxes can vary from year to year.

19. How do individual states/provinces within Ukraine handle taxes, and is there a uniform tax code across the entire country?

In Ukraine, taxes are governed by the Tax Code of Ukraine, which is the main legislation regulating taxation in the country. The Tax Code applies to all regions and municipalities within Ukraine and there is no separate tax code for individual states/provinces.

However, certain tax rates and procedures may vary slightly between different regions depending on local laws and regulations. For example, some cities or regions may have their own municipal taxes or fees in addition to national ones.

The State Fiscal Service of Ukraine is responsible for administering and collecting taxes nationwide. It has regional branches that oversee tax collection and enforcement in different parts of the country.

Overall, while there may be some minor differences in tax administration at a local level, the Tax Code provides a unified framework for taxation across Ukraine.

20. What are the plans for future tax reforms in Ukraine, and how will they impact taxpayers?

The Ukrainian government has proposed several tax reforms in recent years, with the aim of simplifying and modernizing the tax system. Some of the key plans for future tax reforms in Ukraine include:

1. Introduction of a flat income tax rate: The government plans to introduce a flat income tax rate of 13%, which would replace the current progressive rates ranging from 5% to 20%. This is expected to simplify the tax system and make it more attractive for foreign investors.

2. Reduction of VAT rate: The government also plans to reduce the VAT (value-added tax) rate from 20% to 17%. This is aimed at boosting consumer spending and stimulating economic growth.

3. Elimination of corporate profit tax: There are plans to eliminate the corporate profit tax altogether, with businesses instead paying a higher dividend tax rate. This move is intended to encourage reinvestment into businesses rather than distributing profits.

4. Digitalization of the Tax Administration: The government has launched an electronic system for filing taxes and other related documents, with the aim of simplifying procedures and reducing opportunities for corruption.

5. Simplification of reporting requirements: The Ukrainian government plans to simplify reporting requirements for small businesses, which would reduce their administrative burden and potentially encourage more entrepreneurship.

These reforms are likely to impact taxpayers in various ways. On one hand, they may benefit from reduced taxes or simplified processes. However, there are also concerns that these changes could lead to a decrease in state revenue and put pressure on existing social services and infrastructure development programs. It is important for taxpayers to stay informed about these proposed reforms and how they may impact their specific situation.